Steve Blank on Customer Development Process for Startups

I was an early fan of Steve Blank’s customer development model. This post was written when “Four Steps to the Epiphany” was only available on Cafe Press and documents the early set of principles he espoused.

Steve Blank on Customer Development Process for Startups

Steve Blank gave a great tutorial last August at TIE on his “Customer Development” and “Customer Validation” methodology. These are the first two steps of “Four Steps to the Epiphany,” his textbook on how high technology startups should approach the marketing and business development challenges they face. His slides are here (note that this is a PDF file) http://www.tiesv.org/TGS/EM/manageEvent/presentationDocument/471_790

Blank outlined the default high tech startup process and key phases for engineering team

Seed Stage: develop concept

Product Development

Alpha & Beta Test

Launch – First Customer Shipment

and then looked at how other customer facing functions contribute (note Seed Stage omitted because customer oriented typically not involved).

Engineering

Product Development

Alpha / Beta Test

Launch /
First Customer Ship

Marketing

Marcom Materials

Positioning

Hire PR Agency

Early Buzz

Create Demand

Launch Event

Branding

Sales

Hire VP Sales

Hire Sales Staff

Build Sales Organization

Business
Development

First Bus. Dev. Hire

Do Deals to Support FCS

Answering his own question “What’s Wrong With This?”

Embeds premise of “Build it and They Will Come” that only works for life and death products like a cancer cure.

Ignores real risks for most new technologies

NOT Can we make it work?

Will Customers Accept it?

Will Markets Adopt

Has Everyone Chasing the First Customer Ship as the Goal

Sales & Marketing costs are front loaded

De-emphasizes Learning & Discovery to Focused on Execution

Execution & Hiring Predicated on Business Plan Hypotheses

Heavy spending hit if product launch is wrong

You don’t know if you’re wrong until you’re out of money.

His prescription for the fact that most startups die from a lack of customers not a product development failure is to propose a customer development process that runs in parallel to the product development process. In fact, this is what most bootstrappers do, they focus on customers and markets from day one because they don’t have enough resources not to.

In addition to the slides Steve has one of the best books for product development management in a startup called “Four Steps to the Epiphany” that outlines in excellent detail his customer development methodology.

Postscript: I went to buy a couple copies of Steve’s book and found that they were $10 cheaper on CafePress, so if you are thinking of buying a copy, compare the Amazon link above with Four Steps to the Epiphany on CafePress.

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[…] For the record we believe that integrity is essential to the startup sales process, many times you are promising future performance and the team needs to be mindful of the consequences not only to the customer and but to their reputation. We follow Steve Blank’s “Four Steps to the Epiphany” customer development model, which means that we believe the founders must sell. Why? Sometimes it’s the presentation and sometimes it’s the product. In the early market it’s too easy to blame the messenger if you weren’t part of the conversation with the customer and don’t want to hear that your product needs to be changed. […]

[…] Not everything is sanitized hagiography of the founders (or current management) and there are some good entrepreneurial methodologies documented in books like “You Need to Be a Little Crazy” and “Four Steps to the Epiphany” (see the list of books in “Crucial Marketing Concepts” for example). But any of these books are ultimately as useful as reading a math textbook or a book of chess proverbs, or memorizing a set of Go joseki. It’s always valuable to understand the principles, and certainly for challenges in an idealized problem domain like Math or Go you can learn a lot from a formula or a proverb. […]

[…] Steve Blank on the Customer Development Process For Startups (2008) I was an early fan of Steve Blank’s customer development model. This post was written when “Four Steps to the Epiphany” was only available on Cafe Press and documents the early set of principles he espoused. […]